Altria shares just slipped 10%: explore why

Altria Group Inc (NYSE: MO) is down 10% this morning on a report that said the Food and Drug Administration wants Juul Labs’ e-cigarettes out of the U.S. market.

Altria Group has a 35% stake in Juul Labs

Altria spent $12.8 billion in 2018 to secure a 35% stake in the vaping company. As of March, however, the fair value of its investment was about $1.60 billion only.

The write down is primarily related to heightened scrutiny after the U.S. authorities blamed Juul’s nicotine products for an increase in teenage vaping. According to Rae Maile (Panmure Gordon analyst):

In April, Altria reported market-beating results for its fiscal first quarter. The stock is down nearly 15% for the year.

Cowen analyst reacts to the WSJ report

Citing anonymous sources, the Wall Street Journal said an order from the U.S. FDA could arrive as early as today. Reacting to the news, Cowen analyst Vivien Azer said:

Neither FDA nor Altria or Juul has responded with a comment so far. Wall Street currently rates Altria Group Inc at “hold” and sees upside to $56 on average – a close to 40% increase from here.